How Much Does a Performance Bond Cost?
The cost of a performance bond can vary, but a good rule of thumb is that it costs three percent (3%) of the bonded amount. For our small contractor bonds (those bonds <$400,000) this is a pretty good rule to follow. For larger bonds, we spend a considerable amount of time trying to drive the price down as a percentage of the total job cost. For a $250,000 project a 3% fee would be $7,500.
Other Items that affect Cost
The other things to take into consideration are the contractor’s financial history and credit score. If the contractor has poor credit, the bond cost can go up (say, from 3% to 4-5%). The rates can vary depending on the job as well, as certain jobs are deemed riskier, which increases the premium.
A good rule of thumb is that a performance bond will cost around three percent (3%) of the job. It’s a good idea to build that into your bid when getting a bonded job. Good luck.